International Business Essay Example | Topics and Well Written Essays - 750 words - 20

International Business - Essay Example A political union will lead to loss of sovereignty reducing the control that the countries have over key policies. NAFTA has enabled a tremendous increase in trade between member countries to over 400%. Exports and investment flows have increased highly (Aguilar, 2012). NAFTA has helped to build stronger political bonds between the countries leading to improved foreign policy (Benka, 2014). These include the Organization of American States, Latin American Integration Association, Andean Community of Nations and the Rio Group in South America. In Asia Pacific they include Asia Pacific Economic Integration, Association of Southeast Asian Nations, South Asian Association of Regional Integration and the Trans-Pacific Partnership (Lo, 2015). Economic blocs could create trade barriers and increased tariffs against non-member countries. Integration leads to a shift in work force leading to reduced economic growth in the native country. Integration also leads to partial loss of political sovereignty to member states. Regional integration leads to reduced trade with countries outside the economic bloc while increasing trade with members of the integration. This could lead to higher costs of importing or exporting goods in trade between member countries and non-member states. Regional integration has the effect of reducing foreign investment in non-member countries. Integration leads to trade diversion caused by higher taxes and tariffs for non-member countries that will pursue trade outside the bloc (CAC, 2008). Preferential Trade which incorporates reduced customs duties among members as compared to non-members. A Free Trade Area which abolishes tariffs and quotas on trade among members but each member state retains control over their economic policy. A Customs Union incorporates free trade policies and a common customs tariff against non-members. Members have to pass common external tariff legislations. A Common Market permits free